Question

In exchange for land, the company received a 12-month note on January 1. The face amount of the note is $1,000, and the stated rate of interest is 13%, compounded annually. The 13% rate is equal to the market rate. The original cost of the land was $1,260.The full amount of the note, including accrued interest, will be received at the end of the 12-month period, on December 31. Make all journal entries necessary on the books of the recipient of the note during the 12-month life of this note.